Weakness in economy hurt loan demand: says SBI chairman

Weakness in the economy has led to sluggish demand for loans, according to State Bank of India (SBI) Chairman Pratip Chaudhuri.

In a recent interview, Mr. Chaudhuri said that loan demand had not been very strong, and that the small & medium enterprises and mid-corporate segments were posing the biggest challenge.

Speaking on the topic, he said, "As the economy has been a little weak, loan demand has not been very robust. The bigger challenges are in the small and medium enterprises (SME) and mid-corporate segments. That is why our non-performing asset (NPA) numbers went up substantially."

However, he added that the country's largest lender was still over the hump. He said the bank's loan growth so far this year stood at around 19 per cent year-on-year, and that the bank expected to end this fiscal year with a loan growth of nearly 21 per cent.

On loan pricing, Mr. Chaudhuri stressed that one might opt for higher price and poorer risk or for low price and better risk. Thus, the bank opted for low price and better risk. He added that SBI would shift to higher risk only after it would have exhausted its opportunities to lend to the best corporates.

Mr. Chaudhuri also stressed that the bank was taking actions to arrest its NPAs. The bank's gross NPAs currently stand at around Rs 55,000 crore.